Posted by Glenn Strickler on 1/8/08 12:27pm
Msg #229542

Contiunation of 1099 post below .... (Long)

One thing I should have mentioned is that you need to have some system in place to accurately record what each company actually paid you (Quicken home and business serves my purpose). You should never rely on their 1099's alone to determine what you are paid. You need to compare their 1099's to what your records actually say and deal with any discrepancies. Here's why..

An unscrupulous company can and has in my case, reported to the IRS far more than I was actually paid. That is one way they may use to cook their books. Of course, if you believe their figures, they you are paying too much tax. If you use your figures to report your income and don't list any 1099's in your reture, chances are the IRS may never catch it. These unscrupulous people know that. I have had it happen a couple of times with some of the companies mentioned in this forum that are now out of business. Of course, the IRS can seize their business go over their records and 3 years later, be coming to you for an explanation. And you better have one.

There is a process to correct this and cover your behind. Even though I do my own taxes, when I run across this, I print out my records for the company in question and take them and the inaccurate 1099 to a tax attorney friend of mine and he helps me with it so I don't screw it up. None of the computerizied tax programs that I have seen (at least up until 2006, the last time I had this problem) had a feature to deal with it. And there are always those 1099's to check after you filed your taxes. If you correct the problem first, then the IRS will pay special attention to the company in question and as long as your records are accurate, you are fine.

Bottom line is you need to keep accurate records on every company that you do business and compare each and every 1099 you receive to your records. The good news is between all the companies that I have deat with over the past 4 years, I have only had this happen 3 times. But if you don't deal with it, then the IRS could catch it and make you their special friend perhaps years after the incident.

Disclamer: I am not a tax account, tax attorney, or even an attorney for that matter. If you have this issue, then you need to see a tax professional.

Reply by CF on 1/8/08 12:57pm
Msg #229551

Well, that does make sense. I would, certainly, take that issue with a tax attorney if a company said I made X amout of $$$$ and I know for a fact that I made Y amount of $$$$. Thanks for the heads up.....I have the feeling things could be a little "fishy" this year with all of the other payment issues!!!!! Good luck to everyone